What is barter system and its problems?

A system of exchanging goods without using money is known as barter system. The problems associated with the barter system are inability to make deferred payments, lack of common measure value, difficulty in storage of goods, lack of double coincidence of wants. You can read about the Monetary System – Types of Monetary System (Commodity, Commodity-Based, Fiat Money) in the given link.

In the barter system, there is also the problem of storing your wealth, whereas in the monetary system, there is no such problem of storage.

Further readings:

  1. Indian Economy Notes for UPSC Civil Service Exam
  2. Monetary Policy – Objectives, Role, Instruments 

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